Work toward municipal school districts in suburban Shelby County could suffer a setback following a non-jury trial that resumes in federal court Thursday.

In question are two state laws, passed in the wake of Memphis City Schools’ (MCS) charter surrender in December 2010, giving municipalities the opportunity to take control of educating the students within their boundaries.

U.S. District Court Judge Samuel Hardy Mays has already issued one opinion since the ongoing schools merger saga began, upholding MCS’ charter surrender, affirming the August 2013 date for transfer of the district’s administration to Shelby County Schools (SCS) and appointment of a Transition Planning Commission to plan for that merger, as well as declaring the county education board’s electoral districts unconstitutional under the “one voice, one vote” principle.

He also oversaw mediation sessions that ended a year ago with involved parties agreeing to a 23-member education board comprised of the existing nine MCS board and seven SCS board members, plus one appointee each from seven new countywide districts until last month’s election, to jointly govern the still separate school districts through next July.

Mays now is charged with determining the constitutionality of the 2011 Norris-Todd law (officially Public Chapter One) that lifted the ban on MSDs and special school districts under certain circumstances, and a second law that followed a Tennessee Attorney General opinion stating municipalities could not take steps toward creating new districts until after the city-county merger was completed. The second law, coming out of the 2012 session, opened the door for municipalities to hold related Aug. 2 referenda and set school board member elections for November.

The Shelby County Commission and Memphis City Council say the laws apply only to Shelby County and thus violate the Tennessee Constitution barring special legislation.

Norris-Todd provides for a new municipal or special school district when a county school district more than doubles in size by absorbing students from a dissolved special district, as when a roughly 47,000-student Shelby County Schools adds more than 103,000 Memphis students next year.

Such a situation does not currently exist elsewhere in the state though attorneys representing Shelby County suburbs say someday it could in Gibson and Carroll counties, meaning Norris-Todd and related 2012 law do not fit the special legislation definition.

During the trial recessed since Sept. 5, suburban attorneys argued that in Gibson County where there are four special and one municipal school districts but no conventional school district, the City of Milan would be able to create a municipal school district if any of the special ones dissolved. Milan students are currently educated through a special school district also serving children outside the city’s boundaries.

The Shelby County Commission and Memphis City Council responded with a Tennessee Supreme Court ruling that says “reasonable, rational and pragmatic rules,” not “theoretical, illusory or merely possible considerations” must be used to determine whether a law is potentially applicable statewide.

Mays is expected when the trial resumes Thursday to announce whether he will allow testimony from a Global Information Systems specialist, who was not qualified as an expert witness, regarding population maps of Gibson and Carroll counties.

Final arguments are also planned before Mays takes the case under advisement, with no scheduled date for his ruling.

What if Judge Mays rules unconstitutional the state law lifting the ban on creation of new municipal or special school districts?

The Shelby County Commission, Memphis City Council and opposing suburban municipalities have made clear intentions to appeal any ruling unfavorable to their side, meaning the timeline for a final order regarding the constitutionality of two state laws dealing with new municipal or special school districts, likely after review by a higher court, is indefinitely long.

Meanwhile, children in the suburbs could join their Memphis and unincorporated Shelby County counterparts as students in a unified school system next August. A ruling from Mays reinforcing Norris-Todd and the second related law, on the other hand, may allow for the suburbs to operate their own school districts until a higher court says otherwise.

Bartlett Mayor Keith McDonald has echoed fellow suburban mayors in citing a commitment to pursuing local control over education and that a negative ruling from Mays or a higher court would only force them down another path, possibly toward charter schools.

Each of the county’s suburban municipalities have discussed the option of forming non-profit organizations to open and manage charter schools that, according to state law, would receive public funding based on average daily attendance but not have its curriculum or approach directly overseen by the unified county school district.

One catch is the unified school district’s board would have to approve each charter school. A 2011 state law allows for the denial of charter school applications if a school district can prove it would be hurt financially through the charter school’s approval, though several denials locally in the last year have been overturned at the state level. It is possible, however, with the Transition Planning Commission that recently recommended a plan for the schools merger predicting a $57 million budget deficit for the first year of unified operation that any charter school denial based on a negative fiscal impact claim would be upheld.

Suburban residents also see a drawback to the charter school route. While providing some elements of local control, it would not provide for schools populated strictly by students from within a city’s limits. An open enrollment requirement means students from Memphis or Germantown could enroll in a charter school created in Collierville, for example.

What if a countywide half cent sales tax increase is approved Nov. 6 and supersedes similar taxes suburban voters OK’d in August?

Studies completed by Southern Educational Strategies LLC showed Shelby County’s suburbs could raise revenue – likely more than needed in all but Lakeland and Arlington – for municipal schools through a half cent local option sales tax and potentially avoid a bump in property taxes for funding.

State law mandates municipalities spend an amount equal to what a 15-cent property tax would generate on schools but not that the amount must be collected in the form of property taxes.

The majority of suburban voters cast ballots in August in favor of a half cent local option sales tax, setting the stage for a rumored response from the Shelby County Commission: The request for a countywide sales tax hike trumping those passed in the suburbs.

Voters in Memphis, Millington and unincorporated Shelby County will weigh in Nov. 6 on whether they want the commission-approved local option sales tax. Arlington, Bartlett, Collierville, Germantown and Lakeland voters will not see the tax question on their ballots, as they already OK’d such a tax locally. Millington is included in this referendum since its recent local option sales tax request failed by two votes, though city leaders have secured an Oct. 9 hearing date in Chancery Court to challenge the results based on claims of nonresident voter problems in the Lucy community.

Any ruling from Judge Mays on the constitutionality of Norris-Todd and the later municipal schools related law would not nullify suburban municipalities’ approved local option sales taxes since officials did not ask that those taxes exclusively fund education, as to avoid future maintenance of effort issues.If a countywide local option sales tax is approved in November, additional sales tax dollars collected after June 2013 would be split between the unified county school districts, any municipal school districts and the municipalities in which they were collected. Taxes collected between Oct. 1 and June 30 will go directly to the cities regardless November referendum results.

The countywide tax flow would break down like this: The tax amounts to 50 cents on every $100, with 25 cents deposited in the county education fund for distribution among school districts based on student population – the money follows the student. The other 25 cents would be returned to respective municipalities’ general fund for any use.

“It just turns out that other half (25 cents to general fund) is about what our 15-cent property tax would be,” McDonald said, explaining how Bartlett aldermen would probably allocate the money to meet its state spending requirement for a municipal school district.

There has been talk about the possibility suburban municipalities could apply any county education fund dollars it receives toward the spending requirement, though McDonald said he has seen no supporting information.

“We’d like to get credit for that money so we could use this other million and a half dollars for capital improvements and other things that cost the city to have the school district,” he said.

SES did not include capital improvement, startup or legal costs – already more than $300,000 in the suburbs – in municipal schools reports; it only calculated how much municipalities could expect to spend in the first year of operation to provide an education system comparable to the current Shelby County Schools.

In Bartlett, the estimated spending requirement is more than $1.8 million with potential half cent local option sales tax collections at double that amount. Without a countywide sales tax, the city and its Shelby County counterparts would retain all of the additional half cent local option sales tax dollars generated within their boundaries.

Only in Arlington and Lakeland is a property tax increase a current need to fund municipal school districts, as a half cent sales tax would be insufficient to meet those municipalities’ state spending requirements, according to SES.